Reference no: EM133042486
Question - The following transactions related to a machine purchased by Ashkar Company this year:
March 1 Purchased the machine at an invoice price of $10,200; paid $8,200 cash and signed a note for the balance, payable on October 1 of this year, with annual interest at a rate of 12 percent.
March 3 Paid freight of $350.March 5 Paid installation costs of $575.
October 1 Paid the balance due plus the related interest.
December 31 Recorded straight-line depreciation on the machine based on an estimated useful life of 10 years and an estimated residual value of $2,725.
Required -
1. Indicate the accounts affected and the amount of the effect of each transaction (March 1, 3, 5, and October 1) on the accounting equation.
2. Compute the acquisition cost of the machine.
3. Compute the depreciation expense to be reported for this year.
4. What would be the carrying amount of the machine at the end of next year?
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